Now that a 10 basis point hike in GSE guarantee fees has been carved into law, mortgage rates could rise by as much as 25 basis points, according to calculations done by Lenders One, a national cooperative of mortgage funders.
“The increase will be passed onto consumers,” Lenders One chief executive Scott Stern said in an interview with National Mortgage News. (Stern gave a range of one-eighth to one-quarter of one-percent.)
Stern called the increase in g-fees “shockingly appalling,” adding that “It's a ghastly mistake.”
The g-fee hike will be used to pay for an extension of the payroll tax break. The increase will be funded via Fannie Mae and Freddie Mac and paid by lenders. But few in the industry believe that lenders will eat that cost. Instead it will be passed onto borrowers through a higher note rate.
The measure became law in late December after being signed by President Obama. However, the law expires at the end of February.
Lenders One, as well as the Mortgage Bankers Association and other housing-related trade groups fiercely oppose it, and hope to derail its renewal, at least the funding that is based on g-fee increases. “I hope it's killed after two months,” Stern said.